Beef Demand Remain StrongBeef Demand Remain Strong
Although beef consumption is declining due to tightening supplies, the fact is consumers are paying more for available supplies than they would if true demand weren’t increasing. Through the third quarter, the All Fresh Beef Demand Index increased 16 of the last 17 quarters year-over-year, according to Glynn Tonsor, agricultural economist at Kansas State University.
November 8, 2014
Beef supplies may be declining and retail prices increasing, but consumers are demanding more.
In fact, through the third quarter this year, the All Fresh Beef Demand Index (AFBDI) increased 16 of the last 17 quarters year-over-year, according to Glynn Tonsor, agricultural economist at Kansas State University. Year-over-year, both the AFBDI and the Choice Retail Beef Demand Index were 3.9% higher in the third quarter.
“To better understand the AFBDI, note this recent demand increase reflects per capita consumption declining by 4.6% and real (inflation-adjusted) prices increasing by 11.3% ($5.51/lb. nominal price),” Tonsor explains. “If real prices would have increased by 7.1% then the AFBDI would have been unchanged from the third quarter of 2013. The fact prices increased more than this 7.1% ‘no demand change’ level signals that beef demand improved notably.”
In other words, although beef consumption is declining due to tightening supplies, the fact is consumers are paying more for available supplies than they would if true demand weren’t increasing.
Looking at total real per capita expenditures (RPCE) for the four major species in September, Steve Meyer and Len Steiner say in their Daily Livestock Report on Thursday, “Beef was the star in September, gaining 14.1% on last year’s level. That follows an 11.6% year-on-year increase in August and pushes beef’s year-to-date RPCE growth to 5.2%.”
Across the four major species, Steiner and Meyer say RPCE was $49.24 in September, the highest level since September 2004.
“The 8% year-on-year increase (four-species RPCE) in September is the largest such figure since July 2004,” Meyer and Steiner say. “Those 2004 levels, of course, were at the height of interest in the Atkins diet. We think the same things are driving demand today: broad interest in meat/poultry protein and concerns about carbohydrates. The difference this time may well prove to be attitudes toward saturated fats. Where the medical and dietetics fields viewed the Atkins Diet as a risky (or even dangerous) fad, they appear to be warming to the to the idea that maybe the demonization of animal fats in the past was overdone at best and misguided at worst.”
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